South Florida homes hit record prices in May as home-affordability crisis squeezes region
Florida housing prices reached historic highs in May after several months of price jumps have vaulted price tags on existing homes beyond what most residents in MiamiDade and Broward counties can afford, according to data released Tuesday by the Miami Association of Realtors.
Miami-Dade reported a median sales price of $575,000 last month for single-family homes, up from $500,000 last year, and $415,000 for condominiums, a big increase from $325,000 in May 2021.
The prices for singleSouth family homes and condos have climbed steadily each month from $485,000 in September 2021 for homes and $326,790 for condos in October 2021.
Broward has reported a similar trend. In May, houses hit a record median of $586,000, up from $463,750 a year ago. Condos sold at a median of $253,500, a boost from $210,000 in May 2021. Prices for houses have risen each month since the November 2021 median of $485,000. Condo prices have been on the rise since the September 2021 median of $213,000.
Although the Federal Reserve has boosted its key interest rate multiple times since February, that has done little to slow South
Florida’s housing juggernaut. The home-affordability crisis lingers due to the swelling home prices, lean supply of houses and condos to buy, stiff competition from out-of-state and cash offers. In May, 45% of home sales closed in cash in Miami-Dade and 46% of closed sales in Broward were cash deals — close to double the 25% national average.
Area residents continue to compete with outside buyers who have been relocating here because of the expansion of their firms from the Northeast and West Coast. Real estate investors are also buying plenty of houses in Dade.
Early this year, Miami
Dade County and the city of Miami declared states of emergency due to the lack of affordable housing.
“There are many factors that affect pricing,” said Nancy Klock Corey, a Coldwell Banker Realty regional president, noting as a key factor the housingmarket imbalance of strong demand and extremely tight supply. “What is most valuable in South Florida? Land, and we’ve had limited new construction.”
That major regional imbalance already has slowed overall housing unit sales in Miami-Dade and Broward in April and May. Price declines could be next, experts said.
Total home sales declined in May by 10% in Miami-Dade County to 3,198 closed deals from 3,536 sales in May 2021. Sales dropped by 13% in Broward County to 3,222 closed deals after 3,705 total sales a year ago.
The tight housing supply is also affecting the luxury market of house and condo sales of more than $1 million, Berkshire Hathaway HomeServices EWM Realty CEO Ron Shuffield said.
Miami-Dade saw yearover-year transactions fall for the first time in two years in May for listings priced at or above $2 million. Total sales dropped by 23% to 219 deals from 285 deals.
The slowdown at the high-priced end of the market has led to price negotiations and a decrease in list prices of about 5%, Shuffield said.
Price growth is expected to slow across the South Florida market given the dwindling sales activity.
But experts agree buyers can forget about any major price declines. Sellers still have the upper hand given the thin inventory of homes and condos for sale.
A supply of six to nine months is considered a balanced market. In May, Miami-Dade had 2.2 months of houses and 2.5 months of condos available for sale. Broward had 1.5 months of houses and 1.4 months of condos.
“Underlying everything is a negative outlook (from buyers),” Shuffield said, highlighting higher interest rates (which lead to less buying power), high sales prices, a stock market in steep decline and fears about a looming recession. “It’s not like we’ve never been here. We go through these cycles.”
Any good news expected in the summer season for prospective homebuyers? Prices in Miami-Dade and Broward could decrease in certain towns farthest from the beaches, Corey said.
AKAI Estates Alex Yokana, a luxury developer for
20 years, said his clients are looking to Broward for cheaper options or more space than in Miami-Dade. Like many Miami families, luxury buyers are now looking for ways to maximize their housing budgets. Yokana expects housing costs to decline as the year continues.
“We’re sensing that our subcontractors are slowing down,” Yokana said, “because
of high interest rates and uncertainty in the economy.”
In Florida Atlantic University real estate professor Ken Johnson’s research, he has noticed an almost 32% increase in Miami-Dade housing costs compared to a year ago. With an average Miami metropolitan home rental cost of $2,846, Johnson said housing costs are about 30% higher than
what they should be, according to local historic trends going back decades.
Johnson doesn’t expect a housing crash like the one that happened during the recession in 2008. He is more concerned about rising home rental costs for South Florida residents who aren’t getting pay increases to match surging housing prices.
“Rents are much higher
than homeownership is in terms of percentage of income,” he said. ”The rental crisis is much more of a threat. It’s a crisis across a spectrum of incomes. Ultimately, the solution is to build more units for sale and for rent. Mayors and county leaders need to be expediting permits.”